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Restoration Risk Retention Group, Inc. and Mitigation Services, Inc. v. Selective Way Insurance Company

October 12, 2011


On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket Nos. L-2851-07 and L-1299-09.

Per curiam.


Argued September 19, 2011

Before Judges Ashrafi and Fasciale.

In this declaratory judgment action, plaintiff Restoration Risk Retention Group, Inc. seeks shared insurance coverage with defendant Selective Way Insurance Company for defense and indemnification of their insured, Mitigation Services, Inc. d/b/a/ Servpro of Cherry Hill ("Servpro"). The trial court granted summary judgment to Selective dismissing Restoration Risk's complaint. Restoration Risk now appeals from a December 7, 2010 order denying reconsideration of the summary judgment order. We affirm.

Restoration Risk issued to Servpro a Contractor's Pollution Liability Policy for a one-year period beginning October 1, 2006. Selective issued a Commercial General Liability Policy to Servpro for the same time period. Servpro's business included mold remediation services. In October 2007, Michael and Andrea Meltzer filed a lawsuit against Servpro alleging negligence and other causes of action arising out of mold remediation in their Mount Laurel home.

The Meltzers' complaint alleged that in September 2006 a rainstorm caused water to infiltrate into their basement. They contacted Servpro to remove the water and clean the basement. Servpro found mold in two areas and advised the Meltzers to obtain the services of an industrial hygienist to test for mold and to devise a plan for mold remediation. The Meltzers hired industrial hygienist Chris Macri, who prepared a report and mold remediation plan. Servpro agreed to follow Macri's plan in removing the mold.

In October 2006, the Meltzers and their children temporarily moved out of their house when Servpro began its work, which included "fogging" in the living areas of the house. After the work was completed, Macri returned to perform post-remediation testing. He detected a strong odor, which he identified as a chemical named Sporicidin. Macri saw residue on many surfaces in the living areas of the home. He advised the Meltzers that the use of Sporicidin was not included in his mold remediation plan and that he would never recommend the fogging of living spaces with that chemical. When Mrs. Meltzer entered the home to retrieve personal belongings, she suffered a severe headache and throat irritation.

Macri devised a further plan to remove the Sporicidin odor and residue from the home, and Servpro undertook to remedy the contamination. After Servpro's additional work was completed, the Meltzers retained Michael M. Lynch, Ph.D., to inspect the house and report on its condition. Lynch noted that strong odors of chemical disinfectant were prevalent throughout the house, and he observed windows, mirrors, carpeting, and other porous surfaces covered with a heavy film. His report outlined yet another remediation plan. The Meltzers provided Servpro with Lynch's report and asked whether Servpro would perform the additional work. Servpro did not respond.

In March 2007, the Meltzers retained a realtor to assess the value of their house. The realtor determined that the market price without contamination would have been between $400,000 and $425,000. In the contaminated state of the house, the realtor recommended a listing price of $275,000 and full disclosure of the problem to potential buyers.

In April 2007, the Meltzers hired another company, Insurance Restoration Specialists, to execute the remediation plan recommended by Lynch. Despite the further remediation efforts, odors remained, and the Meltzers never moved back into their home. They sold the house in December 2009 for $250,000.

In their lawsuit against Servpro, the Meltzers claimed the following damages: Lynch's fee of $10,880; clean-up and remediation fees of almost $40,000 charged by Insurance Restoration Specialists; living expenses of $75,000 because they were displaced from their home; replacement of the contents of the home independently valued at $110,000; carrying costs of $78,266 for the home; and $180,000 reduction in its market value. The total damages they claimed approached $500,000.

The Contractor's Pollution Liability Policy issued by Restoration Risk had a limit of one million dollars per claim.

It provided coverage for bodily injury or property damage caused by a "pollution incident," which was defined as "emission, discharge, release or escape of 'pollutants' into or upon land, the atmosphere, . . . provided that such emission, discharge, release or escape results in 'environmental damage.'" Restoration Risk did not dispute that the Meltzers' claims fell within the definitions and coverage of its policy. Restoration Risk provided a defense to Servpro in ...

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